EAST PEORIA, Ill. • Caterpillar Inc.’s D11 bulldozer, which costs about $2 million, is the size of a small studio apartment.
On a spring afternoon, Doug Oberhelman, chief executive officer and chairman of the world’s biggest maker of construction and mining equipment, gazes approvingly at one of the gargantuan machines, gleaming in its fresh yellow paint at the East Peoria factory.
“Good-looking machine, isn’t it?” Oberhelman said, the question sounding more like a statement of fact.
Oberhelman, 60, has a sturdy, serious demeanor that’s made him an ideal spokesman for American manufacturing. Over the past two years, the Caterpillar chief has emerged as a powerful advocate for policy changes he said will boost exports and create jobs: looser trade restrictions, a lower corporate tax rate, and greater infrastructure spending. Oberhelman recently became chairman of the National Association of Manufacturers, the industry’s influential trade organization, and has counseled numerous congressmen and the president.
“Doug has not been bashful about speaking out against what he believes are bad, antibusiness tax policies, and he’s got the attention of policy makers,” said U.S. Transportation Secretary Ray LaHood, a former U.S. representative from Peoria who has known Caterpillar’s CEO for 20 years. “They listen to him.”
But Oberhelman’s activism also has made him a target of criticism from those who say Caterpillar is thriving at the expense of its workers. Last year, as the company racked up a record $66 billion in sales, generating $5.7 billion in profit, it repeatedly landed in the news for clashing with production employees.
In January 2012, Caterpillar locked out union workers at a locomotive factory in Ontario, Canada, after they rejected a pay cut of about 50 percent; the company shuttered the plant and moved production to Muncie, Ind., where workers accepted lower wages. Last May, Caterpillar took a hard line during negotiations with employees at its Joliet, Ill., hydraulic parts factory, insisting on cuts to health care and other benefits. After striking for three months, employees caved at the end of the summer. Senior workers’ wages were frozen for six years. Caterpillar is currently battling union workers at its Milwaukee plant.
As Caterpillar has squeezed hourly workers for concessions, Oberhelman’s own pay rose 60 percent in 2011, to more than $16 million. Although the company’s profits have declined in recent quarters, largely because of a decline in commodities prices, which has hurt all mining equipment makers, Caterpillar said on April 22 that Oberhelman’s compensation had jumped again, to $22 million.
The average pay for an executive officer at Caterpillar has risen 56 percent over the past six years, to more than $10 million, according to an analysis by Bloomberg of Securities and Exchange Commission filings.
Caterpillar has become a symbol of the growing divergence in corporate America between profit and wages. As a percentage of gross domestic product, corporate earnings recently reached their highest level in more than 60 years, and wages fell to new lows, according to Moody’s Analytics.
This inequity angers Caterpillar workers.
John Arnold, 35, a parts auditor at Caterpillar’s Morton, Ill., distribution facility, said some of his co-workers are on food stamps.
“I don’t understand how a company can make billions and billions of dollars in profits and have people on welfare,” said Arnold, who has worked for Caterpillar since 1999 and makes $15.66 an hour.
Although Caterpillar has fought vigorously against writing guaranteed pay increases into its contracts — and won, every time — it does offer market-based wage increases. It has also given quarterly bonuses to workers. The company says it pays workers at rates that are locally competitive, though Randy Smith, president of the United Auto Workers’ Peoria chapter, said welders at a nearby plant owned by Komatsu Ltd., Caterpillar’s biggest rival, make $3 to $4 more per hour.
After walking through the Peoria factory, Oberhelman takes off his safety glasses and sits down to eat his low-carb lunch: turkey wrapped in lettuce. He talks about his upbringing in Illinois and his career at Caterpillar. He lists his hobbies — hunting, “outdoors things.” Then comes the difficult question: Why is Caterpillar fighting its workers over wages?
Oberhelman nods briskly, eager to put the issue to rest.
“We have to be competitive if we’re gonna win. And frankly, if we’re not competitive ... we’re not gonna be here in the next 30 years. That’s a simple message, but” — he starts to hammer his hand against the table — “it’s very ... very ... tough.” After a pause, he lets his hand lay flat. “I always try to communicate to our people that we can never make enough money,” Oberhelman continues. “We can never make enough profit.”
When will workers’ wages rise? “The answer to that is: when we start to see economic growth through GDP,” he said. “Part of the reason we’re seeing no inflation is because there’s no growth. Inflation was driven by higher labor costs, not higher goods costs. Frankly, I’d love to see a little bit of that. Because I’d love to pay people more. I’d love to see rising wages for everybody.”